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i ) The project analysis team incorrectly analyzed a potential project which began two years ago. The team thought the heavy equipment used in the

i) The project analysis team incorrectly analyzed a potential project which began two years ago. The team thought the heavy equipment used in the project would last for 10 years (with positive cash flows in all years), but it is now clear that the life of the equipment is only 8 years. The project's year 1-8 cash flows are fine, but management has decided to shutter the project at the end of 8 years rather than replace the equipment and continue the project for the final 2 years.
ii) Due to a (very lucky) miscalculation by the marketing folks, demand for your project's products has increased in the early years of the project, but that reduced sales from future years. The same total inflows were achieved, but the timing was more front-loaded than anticipated.
iii) That same team of marketing folks was looking at another project. For that one, they projected cash flows of $100,000 per year for 10 years. Unfortunately, that same $1mm in total cash flows looks like it will be spread out over 13 years instead.
e) Your firm is looking at three mutually exclusive projects. Describe how you would decide which project(s) to accept, be very clear on which capital budgeting techniques you would use and how you make your decision. (2 pts) The lecture notes cover this one, review as needed.
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